American Economy, Male, Middle-Class and Broke

Yes, dear reader, the chattering classes are upset by ‘wealth inequality.’ One man has a lot. Another has a little. Naturally, the man with a little is jealous. And the fixers come forward with yet more fixes.

Jesus said the poor will always be with us. But do there have to be so many of them? And what about the middle class? It seems to be disappearing; its share of national income has gone down shockingly of late.

Rich? Poor? We’ve been both. And we don’t really give a damn either way.

But everybody wants to be the hero of his own story. Our goal here on the ranch is to make the enterprise profitable… and to hire more people and raise wages. People will be better off financially, and we’ll be loved by one and all.

Maybe the local people will erect a monument to ‘Don Bill’… or at least remember his name when he dismounts for the last time. We’ll let you know how that works out over the next few years.

Meanwhile, let’s moan together about the plight of America’s lumpen middle class.

But first, we will give you a ‘heads up.’ Unlike Thomas Piketty, we will not blame capitalism; the free market is merely the aggregated choices of free consumers, workers, producers and investors. Nor, like Paul Krugman, will we blame hard-hearted Republicans; it is the soft heads of both parties that we hold responsible.

The destruction of middle-class incomes is just one of the miseries their policies wrought. Here’s the Washington Post on the subject:

‘Wages aren’t stagnating, they’re plummeting.

‘Many economists have expressed concern that median wages have stagnated since the 1970s. […]

‘But it’s actually worse than that. The best recent work on changes in male wages has been done by Michael Greenstone and Adam Looney of the Hamilton Project, and they have found that median earnings for men have actually declined since 1969.

‘[M]edian earnings for men in 2009 were lower than they were in the early 1970s. And it gets worse. The decline shown [below] is actually too mild, because it doesn’t take into account the massive exodus from the workforce of men since that period. Between 1960 and 2009, the share of men working full-time fell from 83% to 66%, and the share not making formal wages tripled from 6% to 18%.

‘When you take all men, not just those working full-time, into account, the slight decline in the [below] graph becomes a plummet of 28% in median real wages from 1969 to 2009.’

‘Last week, The New York Times lobbed a bombshell: The US middle class is no longer the world’s top earner. Many countries’ middle classes now bring home more real income than ours. That includes our neighbor to the north, Canada (good news for Canada Day, July 1). The Dutch and Norwegians, who already earn more than the bottom 50% of Americans, are close behind.

‘When we look at net worth per capita for the US middle class, we find that it’s not just the Canadians who beat us. Just about every developed country does. Middle class households in Britain, Japan, Australia, and – get this! – Italy have more than doubled the wealth of their US counterparts. Luxembourg, Belgium, Iceland, Singapore, Austria, Qatar and Kuwait are all also ahead of the US. Overall, we’re 24th.

‘But the true picture is even worse than that. Calculations of per capita net worth for the US include personal retirement plans like IRAs and corporate pensions. In most of the countries that are ahead of the US, citizens receive excellent public pension benefits, which aren’t included in personal net worth. As a result, they tend to save a lot less for retirement than we do. And yet they still have greater net worth than us.

‘In other words, not only is the American middle class earning less than those of other countries – it’s also getting poorer.’

Surely this is a great oddity. The US Federal Reserve helps blow up a credit boom that adds $33 trillion to national spending (and debt) over the last 40 years. This is the greatest ‘stimulus’ of all time.

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities.

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